The state’s Riverview Psychiatric Center faces the loss of an estimated $20 million in federal funding because the federal government has decided that the hospital in Augusta has not solved staffing and governance problems.

The state will appeal the decision, said Health and Human Services Commissioner Mary Mayhew.

Additional Photos

The state’s Riverview Psychiatric Center faces the loss of an estimated $20 million in federal funding because the federal government has decided that the hospital in Augusta has not solved staffing and governance problems. Staff photo by Joe Phelan

The federal Centers for Medicare and Medicaid Services made the decision to terminate Riverview’s funding after finding in two surveys that the hospital did not comply with federal guidelines.

The funding represents more than half of the hospital’s $36 million annual operating budget. If the state’s appeal fails, Maine taxpayers may have to fund the services at the hospital, or Riverview may have to scale back its operations.

In August, the situation prompted the Legislature to pass an emergency bill that allowed the hospital to send some patients to the Maine State Prison in Warren. Lawmakers and the administration viewed the measure, which will cost $3 million a year, as a small fix for lingering problems.

Mayhew said in August that she was confident the state’s broader remediation plan for the hospital would be accepted by the federal government.

But on Wednesday, the Department of Health and Human Services received notice that the federal government will eliminate funding for Riverview. Mayhew, expressing disappointment, said the decision wasn’t justified by the violations cited by federal auditors.

“The decision made by the CMS to terminate simply does not pass the straight-face test,” she said in a prepared statement. “This inappropriate and unwarranted action jeopardizes access to vital psychiatric services for no reason and I am confident we will win our appeal.”

A spokeswoman for the Centers for Medicare and Medicaid Services in Boston did not respond to a request for comment. An automated message said she wasn’t available because of the partial shutdown of the federal government.

In a letter to the state dated Sept. 27, the agency wrote that the funding was terminated because Riverview had not substantially corrected problems that included record-keeping deficiencies and assignments of staff members to multiple wards at the hospital.

The state has submitted several correction plans since inspections of the facility in March and May. In August, Mary Louise McEwen, superintendent at Riverview, told the Portland Press Herald that the hospital was working with federal authorities and she was confident that a remediation plan would be accepted.

On Aug. 30, the Centers for Medicare and Medicaid Services notified the state that it had accepted Riverview’s correction plan pending a final on-site audit. The termination notice followed an unannounced visit Sept. 17 by federal auditors, who found ongoing deficiencies and outlined them in a 16-page report.

“We have taken significant steps to address these most critical issues around patient safety, staff safety, quality and well-documented treatment plans,” McEwen said in a prepared statement Thursday. “The remaining issues do not rise to a level of severity that warrants termination. Most are easily addressed and in one case, we are being held to a standard that we cannot find in the rules that govern participation in the Medicare program.”

AUDIT FINDS SAFETY ISSUES

The federal audit originally found safety issues at Riverview. The hospital tried to correct the problem when it uncertified 20 beds in its Lower Saco Unit. That exempted Riverview from federal standards while resulting in the loss of federal reimbursement for that unit.

The Lower Saco Unit segregates forensic patients from the rest of the hospital’s population. Forensic patients are those committed to state custody after being found not responsible for crimes, those who are being examined to determine their competency to stand trial, and those whom a judge has declared incompetent to stand trial and are being treated to restore their competency.

Safety issues in the Lower Saco Unit were not cited in the termination report, but staffing issues caused by the decertification of the unit were. The report cited several instances in which members of the nursing staff who were assigned to the unit were also responding to emergencies elsewhere in the hospital.

Auditors also made it clear that there had to be distinct delineation between staff hours billed to the portion of the hospital that still qualifies for federal reimbursement and the Lower Saco Unit.

STAFFING SEEN AS INADEQUATE

Patient advocacy groups have often complained that staffing at Riverview is inadequate, particularly for forensic patients. In August, J. Harper, with the Augusta-based Disability Rights Center, told lawmakers that the psychology staff at Riverview had been cut in half since 2009, from 14 to seven positions. Harper noted that the majority of the documented assaults at Riverview – cited as a concern in the first audit – occurred after the first shift of the psychology staff left for the day.

Other infractions cited in the audit included inaccurate record-keeping and documentation of the receipt and distribution of scheduled drugs.

State Rep. Mike Carey, D-Lewiston, said Thursday that the termination report raises questions about the DHHS’s handling of the now imminent funding crisis. “It goes to the broader question about management of (DHHS) and Riverview.”

In her statement, Mayhew said, “I regret that the state must spend additional financial and staff resources to appeal a decision that is not supported by the facts and I am confident that this decision will be overturned.”

DHHS officials could not immediately say how the federal funding mechanism works or what the deadline is to appeal.

Tim Feeley, a spokesman for Attorney General Janet Mills, said in an email that she was reviewing the termination letter and the appeals process.

DOGGED BY NONCOMPLIANCE

Riverview has been dogged by noncompliance issues since the first federal audit, in March. Lawmakers were troubled that they were not notified of the potential loss of federal funding until mid-August. At the time, the LePage administration blasted the Legislature for not approving a bill to allow the state to send forensic patients to the state prison, to ease crowding at Riverview.

Gov. Paul LePage urged the Legislature to pass the bill during a special session in late August, citing the potential loss of federal funding.

Democratic lawmakers said it was the first time that they knew about the audit. On Thursday, some were frustrated that Mayhew and McEwen assured them that the remediation plan would be approved by the federal government.

“The state was able to run this facility for almost 20 years and provide a solid therapeutic environment but now we are struggling to maintain federal compliance and we need to have corrections officers on-site to maintain safety,” said Rep. Drew Gattine, D-Westbrook, a member of the Health and Human Services Committee. “We need to figure (out) what it is going to take to turn this around and make sure people who are very ill are getting the treatment they are entitled to.”

Carey said Thursday that he was frustrated that the administration focused on the bill to move forensic patients to the prison. “The administration wasn’t fixing the real problem,” he said.

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